Indian States Ease Labor Laws, Letting Companies Fire at Will, Extend Hours

Madhya Pradesh, Uttar Pradesh, Gujarat and Rajasthan have abandoned key parts of their labour laws amid a stifling lockdown.

Indian States Ease Labor Laws, Letting Companies Fire at Will, Extend Hours
A worker wears operates a forklift in the factory of Ajit Industries. (Photographer: Prashanth Vishwanathan/Bloomberg)

(Bloomberg) --

Several Indian states have abandoned key parts of their labor laws to allow companies to hire and fire staff at will or extend working hours as the country’s economy reels from the impact of a six-week-long lockdown aimed at containing the spread of the coronavirus.

The lockdown, which began on March 25, was relaxed in all but the worst affected areas on May 4 with factories and offices allowed to reopen while maintaining social distancing norms. Some relaxations, especially in rural areas had been announced earlier. The prolonged stay-at-home order has crippled business activity and put a lid on consumption, the backbone of the economy, which could be heading for its first full-year contraction in more than four decades.

In Uttar Pradesh, India’s most populous state, all but three labor laws have been put into abeyance for the next three years, for all establishments, factories and businesses, a government statement said on Thursday.

“The idea is that in the present circumstances, where we need to provide employment to workers who have migrated back to the state and to protect the existing employment, some flexibility has to be given to business and industry,” Uttar Pradesh Chief Secretary R. K. Tiwari told the Business Standard newspaper.

The western state of Gujarat has also extended working hour limits in factories to 12 hours a day with a weekly limit of 72 hours until July 19, according to a notification. Some other states including Madhya Pradesh and Rajasthan have also made similar changes to existing laws to try and revive industrial activities.

With the newly amended rules companies have been freed of all obligations to workers, said Tapan Sen, general secretary of the Centre of Indian Trade Unions. “The manner in which you treated the workers, they will treat you back in the same way in the days to come.”

India’s Labor Ministry did not immediately respond to a request for a comment.

Businesses Struggling

The country’s lockdown measures came into effect with just four hours notice and overnight wiped out jobs for millions of migrant and daily wage workers. As money dried up in the cities where they worked these workers began arduous journeys, often on foot, in order to get back to their villages. While many made it back home, hundreds of thousands more are in shelters or stuck in the shuttered compounds of the factories where they worked.

Just ahead of the partial lifting of the lockdown the federal government said they would start running special trains to take stranded workers back home. Many are too afraid to return to the cities where they once worked.

Businesses are struggling to restart operations, not just because of social distancing norms but also because their workers have left. Many other states, like Uttar Pradesh, are struggling to find employment for the workers who have returned home.

“Companies will now be in a position to rationalize their labor force given that there are issues of not being able to operate or operate only partly due to the shutdown which has led to a decline in production,”said Madan Sabnavis, chief economist at Care Ratings. “This is however against the position taken by the government when the shutdown was announced where firms were told not to fire employees or cut their salaries as it would cause a lot of hardship to employees.”

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